MiCA Regulations: The End of the Crypto Far West

Legal Qualification of Crypto Assets

Until a few years ago, there was no common European regulatory framework to legally define crypto-assets and cryptocurrencies in a unified manner. The only harmonized regulation was the requirement for entities providing services related to crypto-assets to be registered and compliant with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations.

Regarding the legal and economic nature of virtual currencies, European bodies consistently stated that they did not fall under the “legal tender” category. However, this regulatory landscape changed due to two regulation proposals drafted by the European Council in late 2021. The first document was the “Markets in Crypto-Assets Regulation (MiCA),” while the second was the “Digital Operational Resilience in the EU Financial Services Sector (DORA).” These regulations were part of a broader initiative called the “Digital Finance Package,” which aimed to regulate crypto-assets and their negotiation (Pilot Regime), digital payments, and DeFi while fostering their development.

Specifically, the MiCA Regulation proposed a definition of crypto-assets stating that they are a digital representation of a value or a right which may be transferred and stored electronically, using distributed ledger…